Saudi
Attack Sparks
Fears Of Oil Crisis
By Nick Mathiason
and Mark Townsend
30 May, 2004
The Observer
Oil
prices are set to surge after al-Qaeda gunmen killed at least 16 people,
including a Briton, and seized 50 hostages yesterday during an indiscriminate
rampage through the Saudi Arabian city of Khobar.
In a day that left the oil city, in the east of the country, littered
with bodies and bullet-riddled buildings and cars, the terrorists attacked
four compounds housing foreign workers, seized American and Italian
hostages and fought running battles through the streets.
The body of the
Briton, named locally as Michael Hamilton, an employee of the Middle
East oil company Apicorp, was tied to a car and dragged more than a
mile before being dumped near a bridge, according to witnesses.
Late last night
an armed siege was developing, with suspected Islamic militants holding
the hostages on the sixth floor of Oasis, a high-rise expatriate housing
complex. Most of the captives were said to be Italian and the rest Americans
and Arab Christians.
A Saudi policeman
said the militants were using the hostages as human shields and officials
were trying to negotiate. 'Security forces are worried about storming
because the gunmen have grenades,' he said.
A statement purportedly
from Saudi-born Osama bin Laden's al-Qaeda network was posted on Islamist
internet sites claiming responsibility for the attack, the third on
foreigners in less than a month
The attack sent
shockwaves through a western world already facing high oil prices and
now the prospect of worsening violence in a kingdom riven between its
ruling royal family and jihadist groups determined to bring it down.
As Saudi security
officials surveyed the horror, energy experts warned of the potential
for a global fuel crisis triggered by instability in the country with
the world's largest reserves.The situation in Saudi Arabia has already
pushed prices to $40 per 25-gallon barrel.
'This is close to
the nerve centre of the Saudi oil industry,' said Yasser Elguindi, an
analyst with Medley Global Advisers in New York. 'It could have a devastating
impact on the oil market when we reopen [on Tuesday] after the Memorial
Day weekend.'
The US embassy advised
all Americans to leave the increasingly troubled country, and the Foreign
Office repeated its warning for Britons to avoid all but essential travel
to Saudi Arabia.
A US embassy official
said: 'I can confirm the death of at least one American. There may be
more.'Among the dead was a 10-year-old Egyptian boy caught in the crossfire
as he travelled on a school bus. Witnesses described pools of blood
in hotel lobbies and bullet-riddled cars as foreigners tried to flee
their attackers.
Oil analysts in
London and Washington warned of severe repercussions. Economists called
the attack their worst nightmare come true.
It could send oil
prices above $42 a barrel, pushing the average price of petrol in Britain
beyond the £4-a-gallon barrier. The rise would renew fears of
a world energy crisis not seen since the early Seventies. Prices have
already risen amid fears Saudi Arabia would be unable to defend its
oil industry from terrorists.
The attack came
only days after a senior Saudi al-Qaeda leader, Abdulaziz al-Muqrin,
unveiled a plan for an urban guerrilla war in the kingdom. Saudi security
sources have admitted the destabilising influence of neighbouring Iraq,
complaining of a steady traffic across the border in arms and other
material to terrorist groups.
By yesterday al-Muqrin's
orders had already been put into practice. Four gunmen in military style
dress stormed the Oasis where employees of Shell and the giant US firms
Honeywell and General Electric are understood to live. Two cars with
military markings drove in and gunmen inside them opened fire indiscriminately
at residents. Windows of homes were shot out. Soon afterwards, hundreds
of police encircled the compound as helicopters hovered overhead.
A Lebanese family,
taken hostage and used as human shields, were released. Saudi security
sources said an American, a Briton, an Egyptian, two Filipinos, an Indian
and a Pakistani died in the attacks along with two Saudi civilians and
seven security force members.
Militants killed
five foreigners earlier this month in a similarly brazen attack on a
petrochemical site in the Red Sea town of Yanbu.